Kenya Power gets KSh.7 Bn Subsidy to Slash Electricity Bills by 15%

The Kenya Power and Lighting Company (KPLC) has received a 7.05-billion-shilling subsidy from the treasury to lower the cost of electricity in the country by 15 percent.

The move follows the decision by independent power producers (IPPs) to resist the proposal to slash their tariffs to enable households to enjoy cheaper electricity.

The subsidy will cushion consumers from the surging prices of essential commodities that have pushed higher living costs.

In January, the government announced a 15 percent reduction in power tariffs, part of President Kenyatta’s 30 percent reduction pledge last year. The reduction sought to boost livelihoods and economic growth by reducing the cost of living.

President Kenyatta further promised Kenyans a similar cut scheduled for April 1^st, but this could not be implemented. The IPPs opposed the matter, where they were required to lower the cost at which they sell electricity to Kenya Power.

“There is slow progress in implementing the recommendations of the Presidential Taskforce Report on the review of the power purchasing agreements (PPAs) to reduce electricity prices by 33 percent.”

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Kenya Independent Power Producers (IPPs) sell power to KPLC at about 10 shillings per kilowatts hour, while the thermal company sells at about 20 shillings per kilowatts hour.

The company’s management had earlier projected a 26 billion shillings loss in revenues following the 15 percent cut on power tariffs that was effected in January. The company requires huge cash to tame constant blackouts caused by its aging infrastructures.

KPLC loses almost 4 billion shillings annually due to power thefts and poor power collection mechanisms. In 2020, Kenya Power reported a loss of 939 million shillings which was the highest loss they had made in two decades. This saw the company forced to write off 15 billion shillings in bad debts from unpaid electricity bills, most of which have been outstanding for more than three months.

KPLC has gained more than 317,296 customers in the six months to December 2021, pushing the client base to 8.59 million from 8.27 million in June last year. Its net profit rose to 3.82 billion shillings,  a huge improvement from the 138.36 million shillings it made over a similar period in 2020.